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Is the Australia and New Zealand Banking Group Ltd share price cheap?

Shares in banking and finance giant Australia and New Zealand Banking Group Ltd (ASX: ANZ) have seen some volatility in the past few months on their slide downwards from early 2017 highs of close to $33 – they sit at $28.50 at the time of writing.

ANZ hit its post-GFC low in 2009 when it bottomed out to a $11.89 close on February 12 2009, and has since clawed its way back up to a pinnacle of $37.19 on March 25, 2015  – an all-time high.

But its share price graph has been on an obvious downturn in the last year, from a May 1 2017 high of $32.95 to sit below the $30 mark ever since.

While the stock is unlikely to drop to its 2009 lows, it is as low as it has been for a while and bank investors should keep a close eye on potential buy territory looming for the well-established large cap.

Recent news out of ANZ is its partnership with Data Republic to make the move towards open banking.

ANZ is one of the only major banks taking steps towards sharing data, save for Macquarie Group Ltd (ASX; MQG) – the pioneer for establishing its own open banking platform in 2017 – giving customers the option to connect their banking data with the rest of their digital lives. The data is shared between approved third parties.

ANZ’s partnership with Data Republic – a data exchange technology platform – is a move by the big bank player to find a way to participate in the open banking regime announced in the 2017 Federal Budget and a method to value-add for its customers.

ANZ has suffered through the usual knocks all Australian banks have weathered in the home loan market in recent times and its landmark court case over alleged interest rate rigging would not have helped with adverse investor sentiment and a share price depression.

Recent regulatory intervention has stifled lending activity for most of the big four, but ANZ maintains a solid foothold in the mortgage market as a preferred lender and is focused on chasing a larger slice of the home loan pie by deepening mortgage discounts to meet fierce competition from Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB), particularly, head on.

I think the outlook for ANZ is robust, not just because there is a lot going on behind the scenes at ANZ HQ, but because Australia’s population is growing and with that comes more households looking to take on mortgage debt.

Analysts’ expectations have priced ANZ’s true value at around $34 per share with solid profit growth expected over the next couple of years, so investors who are looking for an in should potentially step up to the starting blocks sometime soon.

Foolish takeaway

I’m not saying buy ANZ shares today, but with interest rates staying on hold at a record low of 1.5% and ANZ digging deep to meet the demands of customers at a quicker pace than its larger peers, it would be useful to watch the price carefully in the lead up to its interim results for any further dips that could signal buy time.

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Motley Fool contributor Carin Pickworth owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and National Australia Bank Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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